Modern Mining: Featured News

In its latest report for the quarter ended 30 June, Coal of Africa Limited (CoAL) states that it is reviewing the development plan for its Makhado project. It says this entails “re-assessing its strategy, which may or may not result in a reduced capital expenditure, a lower production rate and a shorter construction period through to earlier than planned production, with an extended mine life.”

Originally Makhado’s development plan included a 26-month construction phase followed by a four-month ramp up to achieve a production rate of 5,5 Mt/a with a capital requirement of US$281 million.

According to CoAL, the revised strategy – which will be reviewed by the company’s board in September – will look to incorporate a “manageable marketing and funding plan”. The company says that despite the proposed lower output, Makhado would still look to deliver positive returns for shareholders.

Coal of Africa reviews its flagshipCore logging at the Makhado project (photo: CoAL).

It adds: “CoAL remains committed to the sustainable development of the Makhado project, recognising its potential to drive significant socio-economic transformation. The company continues to engage with all stakeholders to ensure the on-going implementation of a co-existent model, seeking co-operation between mining, agriculture and heritage land uses.”

The Makhado project is located in Limpopo Province. The nearest town, Makhado (Louis Trichardt) is situated 35 km south of the project area, with Musina located 50 km to the north. The project represents CoAL’s first project within the Soutpansberg coalfield. Within the project area, a number of coal seams occur within a 30 to 40 m thick carbonaceous zone of the Madzaringwe Formation. The seams dip northward at approximately 12 deg.

Between August 2010 and April 2011, CoAL excavated a boxcut in the project area. This resulted in 45 849 tonnes of ROM being processed, producing 21 800 tonnes of coal, some of which was transported to Exxaro’s Tshikondeni coking coal mine (now closed) for process testing. This bulk sample was excavated in order to confirm the hard coking coal qualities and coking product quantities and to test various processing options for the coal.

In June 2013, CoAL released an independently verified Definitive Feasibility Study (DFS), demonstrating the project’s ability to mine the roughly 173 Mt Run of Mine (ROM) reserves in situ to produce 2,3 Mt of hard coking coal and 3,2 Mt of thermal coal annually at steady-state production over a 16-year life of mine. To achieve this, the required ROM production rate is 12,6 Mt/a.

As detailed in the DFS, mining would be by open-pit methods (although there is potential for underground expansion) with the project being divided into three separate mining areas – the East, Central and West pits – for technical, logistical and practical reasons. The coal would be processed in a plant consisting of three sections – a double-stage DMS plant, a fines circuit (using Reflux Classifiers) and an ultra-fines circuit of Jameson column flotation cells.

In January 2016, CoAL and DRA jointly announced that DRA Projects SA had been awarded the Optimisation Study and Front End Engineering and Design (FEED) package for the project, a key requirement being the identification of appropriate cost reduction opportunities to help optimise the economics of the project.

The FEED and Optimisation Study resulted in a revision of the total project capital estimate from the US$406 million quoted in the DFS to approximately US$280 million, a 38 % reduction of US$126 million.

Last year Makhado was granted a 20-year Integrated Water Use Licence (IWUL) but this was suspended following an appeal by the Vhembe Mineral Resources Forum and other parties opposed to the project. In its quarterly report, CoAL says that the suspension has now been lifted and that, as a result, the project “moves closer to being fully permitted.”

Apart from Makhado, CoAL also owns the Vele coking and thermal coal colliery in the Limpopo (Tuli) coalfield and the Mooiplats thermal coal colliery in the Ermelo coalfield, which are both currently on care and maintenance. CoAL intends selling Mooiplats and is currently in discussion with a number of interested parties.

During the June quarter, the company completed its acquisition of Pan African Resources Coal Holdings (PAR Coal), the 91 %-owner of the Uitkomst colliery, for a purchase price of R275 million. Uitkomst is a high grade thermal export quality coal deposit with metallurgical applications, which is situated in the Utrecht coalfield in KwaZulu-Natal. It consists of an existing underground coal mine (Uitkomst – South Mine) and a planned life of mine extension into the northern area (Klipspruit – North Mine).

According to the quarterly report, the Uitkomst acquisition represents “a highly compelling and attractive value proposition that CoAL believes will provide immediate cash flows to support the company as it continues to progress with the development of the Makhado project.” 

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Email: mining@crown.co.za
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